Due diligence – services and drainage at your property

When purchasing a property, it is important to keep in mind the issues of service connections and drainage. Below are some tips to consider when undertaking your due diligence.

The Vendor Statement/Section 32 statement will, typically, list those services that are not connected.

Unfortunately, Vendor Statements often seem to be produced to convey the minimum of information.

However, what is disclosed in the vendor statement is probably a good starting point for you to commence your own investigations as part of your own due diligence enquiries.

In rural areas, gas might be supplied by tanks and bottles.

In industrial areas, gas is often not provided. This can have massive consequences for industrial operations that need gas for furnaces, etc. Even if it is not required now, understand that it might impact the subsequent resale value of the property, given that the next purchaser might require gas.

Telephone services are not always connected in homes where occupants often rely on mobiles.

Just because a house has a flushing toilet doesn’t mean that the sewer is connected. The property might have a septic system operating, which will require annual service fees and when the time comes to connect to sewer, significant costs can be involved.

Purchasers buying an established home should make their own enquiries of the vendor or agent and should check for themselves during an inspection, for example, that water is running and that gas is connected and operational. Your due diligence enquiries on an established home can be as simple as flicking a light switch or asking to see the gas stove lit.

Vacant land

When purchasing vacant land, extra care needs to be taken. It’s not so simple with vacant land, and enquiries should be made such that you are fully aware of the availability and cost of providing services. If the vendor statement lists those services that are not connected, that doesn’t tell you very much. If the vendor statement says that all services are “not connected”, you will be no wiser as to whether gas, for example, is capable of being connected.

In short, the vendor statement is a poor substitute for appropriate enquiries. If the vendor statement includes a copy of the planning permit pursuant to which the subdivision was created, that may well confirm what services have been reticulated throughout the estate.

Developing land

Those purchasers contemplating developing land need to make additional enquiries. The provision of services might involve massively expensive works, especially where the lot to be developed is the first of its kind in a particular area. “Pioneer” developers may be called upon to fund major infrastructure whereas subsequent developers in the same area may, for a minimal costs, be permitted to “tap” into such infrastructure. Prospective developers should make enquiries of all relevant service providers and, if necessary, obtain engineering advice as to the best method and likely cost of providing services. Drainage and storm water can also be extremely problematic for developers and enquiries should be made of all relevant authorities including council.

To speak to an experienced professional about the purchase of your property, please contact us on 03 9450 9400.